Housing Revenue Account Estimates for 2019/20 to 2023/24 and Proposed Outturn for 2018/19

The Cabinet gave consideration
to a report of the Director of Finance which set out the latest
Housing Revenue Account (HRA) outturn estimate for 2018/19, the
detailed budget for 2019/20 and strategic estimates for the four
years 2020/21 through to 2023/24. The report also set out the
recommended dwelling and non-dwelling rents and service charge
increases to be applied from April 2019.

It was reported that after
taking all relevant issues into account, the projected financial
position for 2018/19 was estimated to be a £2.506m positive
variance when compared to the original budget forecast for 2018/19
approved by Council February 2018 Budget meeting. The majority of
this variance was attributed to the re-profiling of HRA funded
capital schemes into later years due to revisions to planned
spending profiles.

The financial position for
2019/20 showed an estimated HRA closing balance of £19.477m
which was considered to be sufficient to meet future operational
commitments and the potential financial pressures identified in the
risk assessment.

The 2019/20
position had been presented after allowing for an increase in rent
of 3.4%.

Members
noted the Government had already advised that Private Finance
Initiative (PFI) properties would be exempt from Central
Government’s 1% Social Rent Reduction Programme. As all
Oldham housing stock was contained within two PFI schemes, the
2019/20 budget would follow historic rent setting guidance of
Consumer Price Index (CPI) plus 1%, resulting in an increase of
3.4% (CPI was taken as at September 2018).

The
proposed HRA budget report was presented for consideration by the
Overview and Scrutiny Performance and Value for Money Select
Committee on 24 January 2019 The Select Committee was content to
commend the report to Cabinet for approval. The Cabinet Member for
Finance and Corporate Resources highlighted a recommendation from
the Select Committee in relation to financial hardship. The Select
Committee agreed that due to the 53 week rent year in 2019/20 and
the fact that Universal Credit had been designed around a 52 week
rent year, options should be considered to assist tenants in
receipt of Universal Credit so that they did not fall into
arrears.

Options/Alternatives considered

In order
that the Council complied with legislative requirements it must
consider and approve a Housing Revenue Account budget for
2019/20.

Within the
summer budget announcement of July 2015, the Government imposed a
1% per annum social rent reduction for 4 years. All Oldham housing
stock would be exempt from this decrease and an increase would be
applied in accordance with current Government guidance.

Should the
Council not wish to continue with the established practice of
following Government guidelines, 2 potential scenarios had been
assessed:

-proposed rent increase of 3.4% is changed
to 2%

-proposed rent increase is removed
altogether

The loss to
the Housing Revenue Account in 2019/20 in terms of income would be
£0.114m at a 2% increase and £0.278 with no rent
increase. The cumulative impact of this
income loss over the life of the Business Plan would have a lasting
and significant impact on the long term financial strength of the
HRA.

RESOLVED
– That:

The forecast
Housing Revenue Account outturn for 2018/19 as per Appendix A to
the report be approved and commended to Council.

The proposed
Housing Revenue Account budget for 2019/20 as per Appendix B to the
report be approved and commended to Council.

The strategic
estimates for 2019/20 to 2023/24 as per Appendix D to the report be
approved and commended to Council.

The proposed
increase to dwelling rents for all properties of 3.4% be approved
and commended to Council.

The proposed
increase to non-dwelling rents as per individual contracts be
approved and commended to Council.

The Private
Finance Initiatives 2 and 4 service charges are unchanged be
approved be approved and commended to Council.

The proposal thatPrivate Finance Initiative 2 concierge charges are
set in line with actual costs for full recovery be approved and
commended to Council.

The proposal that the Council takes
whatever action is within its powers to support tenants in receipt
of Universal Credit who are impacted by there being 53 rent weeks
in 2019/20 be approved and commended to Council.